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POWER
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Solar parks are cheaper, faster and safer to build and maintain, than oil and gas plants.
Solar dawn in the GCC
The influence of renewable energy, especially solar, is growing in the oil- and gas-rich Gulf states. Slava Kiryushin, head of energy at DWF, and Joshua Coleman-Pecha, associate at DWF, shed light on the challenges the solar energy sector needs to overcome before it can realise its full potential.
ONE THING THE Middle East has, and we assume will always have, is sunshine – plenty of it. The members of the Gulf Cooperation Council (GCC) each take different steps to harness this sunshine to implement a gradual diversification from hydrocarbons to alternative sources.
The approach is due to increasing energy demand. Rapid population growth in GCC countries coupled with largescale economic and industrial expansion plans mean the region's energy consumption is predicted to increase dramatically.
Solar power should, if implemented correctly, produce cheaper energy than oil and gas. Solar parks are cheaper, faster and safer to build and maintain, than oil and gas plants. This should make them an attractive investment.
The United Arab Emirates (UAE)
The UAE leads the way in solar energy with 79% of the region's installed solar generation capacity, according to International Renewable Energy Agency analysis. It is in the process of implementing its ambitious ‘Energy Strategy 2050’ plan which targets to derive 44% of its energy from clean sources (mainly solar), 38% from gas, 12% from 'clean' coal and 6% from nuclear energy by 2050.
The Noor Solar Park in Abu Dhabi is the largest in the world and it is considered a benchmark for solar energy projects. It became operational in mid2019 and generates 1.2 Gigawatt hours (GWh) of energy.
Construction of Abu Dhabi's new 2 GWh solar park in AlDhafra should commence shortly and will complete in 2022. It will almost triple Abu Dhabi's solar power generation capacity to 3.2 GWh and take the emirate's clean energy share to 17%, and according to the Economist, will generate electricity at twothirds the cost of gas and one third of the cost of oil. It is projected to have the world's cheapest solar energy tariff that will be 44% cheaper than Noor Park.
The Mohammed Bin Rashid Al Maktoum Solar Park in Dubai has been split into five phases. Construction started in 2013 and is expected to complete in 2030. As part of phase four, a 263metre solar tower was installed the tallest in the world. On current projections, by 2021, the Park will increase Dubai's clean energy share to 24% of its overall mix. Once fully operational, the Park will generate 5GWh, making it the world's largest solar park.
Saudi Arabia
Another solar powerhouse in the GCC is Saudi Arabia. Its ambitious National Renewable Energy Programme aims to develop just under 60GWh of renewable energy over the next decade – 40GWh of this will be from solar energy. The Middle Eastern Solar Industry Association reports that Saudi Arabia is ahead of its interim targets in meeting this longterm goal. The kingdom currently has seven solar projects, with a total generation capacity above 1.5 GWh, out for tender.
Mohammed bin Rashid Al Maktoum Solar Park ‐ a leading project that promotes sustainability in the UAE.
Photo Credit : DEWA
Other GCC based solar projects
The bulk of the GCC's solar energy investment and deployment is in the UAE and Saudi Arabia. However, other GCC nations are deploying smaller solar facilities.
In Kuwait, the completion of the Shagaya Complex in 2030 will see a combined total installed capacity of 2GWh, comprising 1,850 MWh of energy from solar and 150 MWh from wind.
Oman's first utilityscale solar power project, the 105MWh Amin facility, went online at the end of May 2020. The Sultanate also has two solar projects with combined capacity of 1.1GWh out for tender.
Market penetration of solar technology and use in the GCC's private sector is extremely hard to estimate. However, residential, commercial and industrial facilities are increasingly installing solar panels. This is promising as it suggests an even greater percentage of the GCC's energy mix will be from renewable sources than official statistics indicate.
Is the future as bright as suggested?
Whilst GCC countries are taking impressive steps towards clean energy generation, the process is only just beginning. GCC nations still rely on fossil fuels to meet most of their energy needs. The International Renewable Energy Agency (IRENA) reports that fossil fuels comprise around 90% of the UAE, Oman and Bahrain's energy mix. Only 10% of those nations' energy is currently derived from renewable sources. Solar is just one part of the renewable mix (albeit the largest).
There remain significant challenges for solar energy to overcome before it can realise its full potential in the region.
First, it needs 'grid parity'. In the GCC, fossil fuels are subsidised and relatively cheap. To be effective, solar energy needs better regulation of markets to compete with subsidised sources.
Second, more capital needs to be made available. Investment is required not just to build solar parks but also to connect them to the grid, so the energy they produce can be distributed effectively. Typically, raising finance for these steps is harder for solar projects than for oil and gas projects.
Third, solar energy is intermittent. For effective solar harvesting, very bright sunlight is required. Even with the abundance of sunshine in the GCC, harvesting solar energy does not happen consistently. One possible workaround is the improvement in storage and battery technology.
Finally, solar parks are vulnerable to sandstorms and maintenance issues. In a sandstorm, if the solar panels are not damaged, sand cover can reduce their effectiveness by up to 30%, according to Delloite. Hightech cleaning solutions, such as drones and robots, are being tested to overcome this challenge.
Improving regulation
Market regulation poses a significant barrier to solar energy deployment. However, regulatory frameworks are gradually underway throughout the GCC that will assist in solar energy's development.
The UAE, in particular the emirate of Dubai, is taking the lead. All independent solar power producers in Dubai are backed by a guarantee from the Dubai Department of Finance. This ensures that solar power projects in the emirate are financially viable.
Dubai also launched the Shams Rooftop Solar Program in 2015. This allows consumers to install solar panels on their buildings and have a twoway connection to the electricity grid. The consumers are charged on a 'net metering' basis. I.e. they only pay for the net amount of electricity they consume. If they produce surplus electricity from their solar panels, it is sold to the grid. This allows consumers to have the dual benefit of a reliable grid connection and lower net energy cost. Analysis by has found that the project has already developed 18.7 MWh of energy.
Saudi Arabia and Oman have established schemes similar to Dubai's. Through this change in regulation, Oman aims to increase prevalence of rooftop solar generation from 10% to 30% of residential premises. Despite this, solar energy still needs a broader range of government and fiscal policy that supports its growth for it to become truly successful.
Outlook
Solar power is not a silver bullet for the GCC's growing energy requirements. No one is anticipating the imminent end of fossil fuel
Joshua Coleman‐Pecha, associate at DWF
Photo Credit: DWF
Photo Credit : DWF
Slava Kiryushin, head of energy, DWF
usage. However, the GCC appears politically, economically and socially committed to expanding its use of renewable energy and solar power sits at the forefront of this.
GCC nations are mindful that oil is finite and its prices can be volatile. Solar energy is infinite albeit currently intermittent. With technological developments, GCC nations could potentially store and export solar derived energy for profit, as they currently do with oil. ■ Solar PV to generate US$182bn investment in Middle East renewables by 2025 THE PRESSURE TO lower greenhouse gas (GHG) emissions is compelling the Middle East – the United Arab Emirates (UAE), Saudi Arabia, Oman, Kuwait, Bahrain, Iran, Iraq, Jordan, and Lebanon – to embrace renewable energy, reveals Frost & Sullivan's analysis, solar PV dominating investment opportunities in renewable sector across the Middle East, 20202025.
With a 57GW capacity addition – solar photovoltaic (PV), concentrated solar power (CSP), and wind – by 2025, the region is estimated to witness an 18fold growth of the current capacity, thereby receiving an investment of US$182.3bn. Despite this, the COVID19 crisis has adversely impacted the renewable energy market through supply chain disruptions, delays in tendering processes, crashing oil prices, and government restrictions. "Capabilities in solar are more pronounced compared to wind energy as most countries in the region fall under the Sun Belt," said Saraswathi Venkatesan, energy & environment research analyst at Frost & Sullivan. "Going forward, with wind making less than 20% of the total renewable energy installed capacity by 2025; solar energy investments are relatively more attractive."
Venkatesan added, "Solar cell manufacturing and solar panel assembly are key areas to consider for investment. Going forward, in terms of value, solar PV investments are expected to contribute the most, at 67.4% of the opportunity size for the next five years, followed by solar CSP investments at 17.5%."
